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mergers and aquisitions – SirsiDynix + Vista

You know, if you want to bury some news, make sure to announce it between Xmas and New Years. So SirsiDynix says “investment partnership” in the article headline (their pdf) but “acquisition” in the article. Vista hasn’t announced it at all as of this typing. Press releases are usually vapid and devoid of content and this one is no different. The letter from Sirsi-Dynix CEO is also not really forthcoming. “The partnership validates the contributions libraries and SirsiDynix make to our communities.” What? Dan Scott has some analysis on his blog, Coffee|Code and makes a few predictions.

You heard it here first: expect lots of news from SirsiDynix in 2007. I’m predicting more service fees (100% confidence), increased annual support fees (100% confidence), and the beginning of the end of Unicorn with an announcement that Horizon is the strategic product for new development efforts going forward (75% confidence). I’ll go out on a limb and say that a merger or acquisition of SirsiDynix in 2007 is unlikely (33% confidence), but after proving their new business strategy and the nice spikes on their revenue and profit charts, I’ll say that it’s quite likely in 2008 (80% confidence).

I’m not into the industry enough to make any predictions or even any observations, but it seems to me that if a non-library company sees fit to buy a library services company it’s probably because that company is making money hand over fist. And if Sirsi-Dynix is making money hand over fist, it’s because libraries are paying them boatloads of money. Sirsi-Dynix says they expect no staffing changes. A little more over at Library Journal.

Don’t miss this amazing graphic showing “the history of mergers and acquisitions in the library automation industry” over at Library Technology Guides.

3 comments for “mergers and aquisitions – SirsiDynix + Vista”

I have a few editorial comments on the merger on Hectic Pace as well. In fact, I spoke to a couple folks at SirsiDynix the other day. What some people are missing here, I think, are a few major changes to the ownership setup of the company.

a) Vista is a technology equity firm. This market has traditionally been made up of founding owners, then some large companies who had little to do with the ILS, then some venture capitalists. Vista is more like Fransisco, the company that just bought Ex Libris and Endeavor. How these equity firms impact the somewhat quaint and old fashioned (yet still loved by librarians) ownership models is yet to be seen.

b) SD’s previous ownership was under a tenure fund managed by Seaport Capital. This fund, started in 1997, was used to fund the initial investment in Sirsi (before Sirsi’s acquisition of Dynix). So, the fund was expiring and SD decided to go after new sources of funding and Seaport Capital wanted to pay out to their investors in the expiring fund.

c) Vista is now the sole owner of all private shares of the company. Before this buyout, Dynix’s owner (Hicks, Muse, Tate & Furst) still owned a small stake, as did a handful of individuals.

I agree with some of Dan Scott’s musings, but wonder what the basis for some of his conjecture is. For example, most ILS contracts have maintenance schedules, inflation caps, etc. I’m not sure how SD will get more contract fees out of customers without modifying existing contracts. As for service fees, I imagine they will go up if libraries contract for more services, but the contract terms still apply as in the first case.

All of these kinds of press releases require a little reading between the lines, and enough of these acquisitions and mergers have taken place over the last few years that we should all be looking forward to determine the future of the marketplace. Many things could happen, and many things probably will.

Nice digging on the Huntsville news article, Jessamyn, and great background info, Andew.

Some of my musings are pure conjecture provoked by a pre-Christmas news release that lacks any of the details that existing customers would be interested in. I had a hope that by playing the fool I would be able to provoke some actual concrete information from the involved parties. But heck, so far we don’t even have a blog post from Stephen Abrams on the matter…

You’re right, existing SirsiDynix customers would be protected from any unexpected fee increases for their existing services.

I also agree with you that we’ll probably see new conditions and increased fees for libraries that want to purchase a new service (say, the already heavily-pushed Rooms). But a potential gold mine for Vista is for libraries jumping off an existing-but-failing ILS (Voyager, anyone?) to join the market leader. Vista gets to start with a blank page for writing up contracts with these customers; and in the relatively volatile ILS marketplace of the past few years the market leader is going to look like a safe bet for administrators — even if it is more expensive to get on board now than it would have been last year, say.

Of course, I’m aware that my musing / conjecture also verges on fear-mongering, which might scare libraries into SirsiDynix’s arms now before Vista has a chance to revamp contract terms and fee schedules.